The traders allegedly placed bona fide orders to buy and sell Treasury securities while almost at the same time placing non-bonafide orders on the opposite side of the market for the same Treasury securities, which they have no intention to execute.
The SEC alleged that the traders used the non-bonafide orders to create a false appearance of a buy or sell interest, which would lure others to trade against the bona fide orders at prices that are more favorable to J.P. Morgan Securities. They immediately canceled the non-bonafide orders after obtaining beneficially priced executions for their bona fide orders.
In a statement, SEC Division of Enforcement Director Stephanie Avakian said, “J.P. Morgan Securities undermined the integrity of our markets with this scheme. Their manipulative trading of Treasury cash securities created a false appearance of activity in the market and induced other market participants to trade at more favorable prices than J.P. Morgan Securities would have otherwise been able to obtain.”
